1980 was the year of reckoning for me. I turned 35 that year and had been at the same job for 9 years. I had done well, in fact too well, as I had reached the top rung of the technical ladder. I had two patents to my name. Even though I was at the top of my game, I felt scared as I was starting to feel stagnant. Besides, my job with the defense contractor Singer-Link was seen as an ultimate sin in Silicon Valley.
I was making top dollar but I felt restless. During that time I saw in the press that David Jackson, (name changed to protect the guilty) who had worked for me, had become an entrepreneur. He had founded a company to do a Z80/CPM-based hot box. This news totally destabilized me as a person. David was also an immigrant, albeit from England, and I felt he wasn’t a very good engineer, definitely nowhere as good as I was. But he had chutzpah to leave his job and become an entrepreneur. I kept thinking, why can’t I be an entrepreneur too? Why was I stuck at Singer-Link?
I tried to get a more commercial job but had a tough time, as stigma of a lifer in a defense job was too much to overcome. I finally took a substantial pay-cut, from $75,000 per year to $45,000 to move to Zilog Systems Division as a junior hardware engineering manager.
Salary of $75,000 in 1980 is equivalent to $300,000 in 2015! It was a big personal hardship as I had two young children and a mortgage to take care of. I felt it was now or never.
It was only six months before I regained my confidence again, as I helped fix the flaky computers that Zilog was selling. I was promoted and salary was mostly restored as my boss was afraid to lose me now.
1981 was the year when the IBM PC was introduced. It was also the year DEC, Intel and Xerox jointly announced Ethernet protocols. There was a sense that the whole world was about to change, as Mainframe based computing was going to be replaced by a mostly distributed paradigm. I felt somebody is going to have to provide networking for this emerging paradigm of heterogeneous of computing; where PC’s, workstations, servers, minicomputers and mainframes will have to interact on a high speed network.
I looked at the Ethernet specifications and felt that I could design boards implementing these protocols using off the shelf chips for various computers in the market. Ethernet chips were several years away and most people by that time were totally dependent on VLSI chips to design systems. I had grown with basic building blocks of AND, OR, Not gates and flip-flops and could do magic with them. I sketched a design by hand and felt confident that it would work.
I, Navin Jain and Mr. X (I don’t want to use real name here, as I and this person parted the company in 1985, and have not talked to each other since then) left Zilog on January 1, 1982 to start Excelan. Navin was a BITS PIlani Gold Medalist and a CMU PhD in Computer Science, but very shy. I had gone to IIT Bombay and Michigan Tech. I was supremely confident in my engineering skills but for some reason had very low self-esteem. Mr. X had gone to Doon School and was the most polished of the three. He was an IIT Kharagpur Graduate and a Yale PhD in Engineering. He was also confident, with an outgoing personality. We agreed that he would be the CEO and tasked to raise money while I got busy designing hardware, and Navin got busy writing software.
It took us 8 months to raise money, as Indians were not seen as entrepreneurial material at the time. Our business plan was seen as very good and we had made a couple of sales already before one VC decided to take a chance on us. He gave us $2 million for the 50% of the company, which we thought was a very fair offer.
1983 was the year we were supposed to do $2 million in revenue but only did about half a million. I was very unhappy with Mr. X and felt that he was not holding his end well. He did not hire well at all in sales and marketing. I also felt that we would be in big trouble with the VCs. For some reason we were given an additional $2 million at 2X the valuation.
By 1984, in addition to the Ethernet, we had adopted TCP/IP to complete the solution. I thought we had a fantastic solution for the market, but they were not being marketed and sold properly. They were also not priced right. More about this in a later post.
We had a plan to do $10 million and be profitable in 1984. Based on that plan, we raised an additional $3 million at 2X step-up again. But we fell very short again, doing only $5 million and losing $2.5 million. The board had wised up and fired Mr. X.
I was made an interim CEO with marching orders to conserve cash (we had $800,000 in the bank). The board initiated a search for an outside CEP. I let a third of the company go and felt that I had enough cash for about 8 months, though I did not feel I personally had eight months. Overnight I had to metamorphose into a CEO if the company was to survive.
We finished 1985 with $10 million in sales and were profitable for the year. Almost half of those sales came in the last 4 months of the year. We were off to the races. We never had to raise any more money, either.
